Quote:
Originally Posted by Clocker
The article talks about selling USDA loans as commercial paper. There are two kinds of USDA loans, direct and guaranteed. Direct loans are loans of USDA money, usually with very low interest rates and very long terms. Rates are as low as 1% and terms are as long as 38 years. Hardly attractive as commercial paper, and I question that the USDA has legal authority to sell them. The other loans are from private lenders and are guaranteed by the USDA. You can't sell a loan you didn't make.
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I'll be honest... I didn't read it.
I do know a thing or two about USDA loans though as I do a few a month... he's going to raise billions selling USDA direct paper?
Hang on let me collect myself...
Okay... well...
Another problem with selling USDA paper is that the USDA Mortgage Insurance that backs it runs off of the FNMA rolling 60 Day average. USDA MI will not insure any mortgage with a stated rate above that 60 day average.
It's a look back model.
There would be no margin for it in the secondary market... at least not billions of dollars worth. You're selling outdated paper with outdated margins that are worse than you can get anywhere else in the secondary market.
Hardly attractive is an understatement.
